End to era of austerity budgets near, claims Noonan

Ireland is within "touching distance" of no longer having to frame annual austerity budgets, Minister of Finance Michael Noonan has told members of the financial services industry.

“We have a difficult budget coming up in October,” said Mr Noonan. “However, once delivered we will be within touching distance of the 3 per cent deficit target [set by the EU] and the days of massive budget adjustments will be behind us.”

EU requirements
Last weekend Mr Noonan said an adjustment of between €2 billion and €3 billion would be required from this year's budget, which will be delivered on October 15th, in line with new EU requirements.

Mr Noonan said the National Treasury Management Agency’s funding requirement for the State had been reduced by €40 billion as a result of deals struck this year on the Anglo Irish Bank promissory notes and the extension of maturities of our loans with the European Financial Stability Facility and the European Financial Stability Mechanism.

"My focus is now turning to the ESM [European Stability Mechanism] and the possibility of using it to retrospectively recapitalise the Irish banks. By this I mean generating a return to the taxpayer from their investment in AIB, Bank of Ireland and Permanent TSB," said Mr Noonan at the annual lunch of Financial Services Ireland in the new Marker hotel, Dublin.

He said Ireland had secured a commitment from Brussels in the past fortnight to “examine the possibility of retroactive recapitalisation on a case-by- case basis. This opens up opportunities for Ireland that I intend to fully explore and the objective is to move the Irish debt closer to the EU average.”

Mr Noonan said the Government’s focus is also to exit the EU-IMF bailout programme at the end of the year. “Over the last number of months we have opened initial discussions with the troika on the type of supports that may be available post programme,” he said.

The Minister noted that the financial services sector here employs about 33,000 people in 500 firms, who contribute more than €1 billion to the exchequer in corporation and payroll taxes.

Significant restructuring
He noted new jobs at Zurich, BNP Parisbas, OmniPay and Capita while also citing announcements of restructuring within the traditional banking sector, including Ulster Bank.

He said the private sector was adding 2,000 jobs a month, but accepted that the level of unemployment here “remains unacceptably high”. The standardised unemployment rate was 13.6 per cent in June.

“Much more work is required and we will continue to prioritise jobs creation across all our policies,” he said, adding that the Government has targeted an increase of 10,000 employees in the IFSC by 2016.

He said new legislation made it possible for the Central Bank of Ireland to accept applications from non-EU credit institutions to operate here on a branch basis subject to certain conditions being met.

“There have been discussions already between the IDA and non-EU banks that have indicated a strong interest in opening new businesses in Ireland on this basis, with the associated employment dividend.”